Robin’s Business Had Total Assets at the Start of the Year

Multiple Choice

Robin’s business had total assets at the start of the year amounting to £140 000 of which £80 000 related to current assets. Robin disposed of a fixed asset which had been purchased for £30 000 and on which £16 000 depreciation had been charged for £15 000 and bought a replacement asset for £26 000. He charged £11 000 depreciation on his assets in the year.
- what would be the effect of all the transactions during the year on total profit and on the cash flow statement?

A) Total profit would be reduced by £10000 and the cash flow statement would show a net outflow of £26000
B) Total profit would be reduced by £11000 and the cash flow statement would show a net outflow of £26000
C) Total profit would be reduced by £10000 and the cash flow statement would show a net outflow of £11000
D) Total profit would be reduced by £11000 and the cash flow statement would show a net outflow of £15000